Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
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Chapter 11
Case No.: 03-10877 (BRL)
Hon. Burton R. Lifland
In re:
Dice Inc.
Debtor
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MONTHLY OPERATING REPORT FOR THE
PERIOD APRIL 1 TO APRIL 30, 2003
DEBTOR'S ADDRESS: Dice Inc.
3 Park Avenue
New York, NY 10016
MONTHLY DISBURSEMENTS: $194,000
--------
DEBTOR'S ATTORNEYS: Robert J. Feinstein
Pachulski Stang Ziehl Young Jones & Weintraub P.C.
461 Fifth Avenue
25th Floor
New York, New York 10017-6234
MONTHLY OPERATING PROFIT (LOSS): $(356,000)
----------
REPORT PREPARER: Dice Inc.
The undersigned, having reviewed the attached report acting as the duly
authorized agent for the Debtor in Possession, declares under penalty of perjury
under the laws of the United States that the figures, statements, disbursement
itemizations, and account balances listed in the Monthly Report of the Debtor
are true and correct as of the date of this report to the best of my knowledge,
information and belief.
Date: May 15, 2003
DICE INC.
/s/ Michael P. Durney
---------------------
Michael P. Durney, Senior Vice President, Chief
Financial Officer and Treasurer
DICE INC.
TABLE OF CONTENTS
Page
----
Consolidated Financial Statements (unaudited) ..................................................... 3
Consolidated Balance Sheet as of April 30, 2003 ................................................... 3
Consolidated Statement of Operations for the month ended April 30, 2003 ........................... 4
Consolidated Statement of Cash Flows for the month ended April 30, 2003 ........................... 5
Balance Sheet of Dice Inc. (debtor-in-possession) as of April 30, 2003 ............................ 6
Statement of Operations of Dice Inc. (debtor-in-possession) for the month ended April 30, 2003 .... 7
Statement of Cash Flows of Dice Inc. (debtor-in-possession) for the month ended April 30, 2003 .... 8
Notes to Consolidated Financial Statements ......................................................... 9
2
DICE INC.
CONSOLIDATED BALANCE SHEET
as of April 30, 2003
(unaudited)
(In thousands except
per share data)
ASSETS
Current assets
Cash and cash equivalents................................................. $ 6,803
Marketable securities..................................................... 1,100
Accounts receivable, net of allowance for doubtful
accounts of $556........................................................ 1,696
Prepaid expenses and other current assets................................. 2,710
---------
Total current assets.................................................. 12,309
Fixed assets, net......................................................... 5,717
Intangible assets, net.................................................... 1,845
Goodwill.................................................................. 14,905
Restricted cash........................................................... 567
Other assets.............................................................. 48
---------
Total assets.......................................................... $ 35,391
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses..................................... $ 1,707
Deferred revenue.......................................................... 4,714
Accrued reorganization items, net......................................... 269
Prepetition liabilities subject to compromise............................. 73,115
Postpetition liabilities.................................................. 274
Notes and leases payable--current......................................... 718
---------
Total current liabilities............................................. 80,797
Leases payable............................................................... 194
Other liabilities............................................................ 923
Commitments and contingencies
Stockholders' deficit
Common stock, par value $.01; 75,000 shares authorized;
11,104 shares issued.................................................. 111
Additional paid in capital................................................ 126,683
Accumulated other comprehensive income.................................... 1
Treasury stock at cost, 5 shares.......................................... (200)
Accumulated deficit....................................................... (173,118)
---------
Total stockholders' deficit........................................... (46,523)
---------
Total liabilities and stockholders' deficit........................... $ 35,391
=========
The accompanying notes are an integral part of these consolidated financial
statements.
3
DICE INC.
CONSOLIDATED STATEMENT OF OPERATIONS
for the month ended April 30, 2003
(unaudited)
(In thousands except
per share data)
Revenues....................................................... $ 2,196
Cost of revenues............................................... 268
--------
Gross profit................................................... 1,928
--------
Operating expenses:
Product development......................................... 171
Sales and marketing......................................... 924
General and administrative.................................. 445
Depreciation................................................ 396
Amortization................................................ 205
--------
Total operating expenses................................ 2,141
--------
Loss before reorganization items, net, and interest............ (213)
Provision for reorganization items, net........................ (96)
Interest expense (contractual interest expense was $405
for the month ending April 30, 2003)........................ (11)
Interest and other income...................................... 8
--------
Net loss....................................................... $ (312)
========
Basic and diluted net loss per share........................... $ (0.03)
========
Weighted average shares of common stock
outstanding used in computing basic and diluted
net loss per share.......................................... 11,104
The accompanying notes are an integral part of these consolidated financial
statements.
4
DICE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the month ended April 30, 2003
(unaudited)
(In thousands)
Cash flows from operating activities:
Net loss................................................................$ (312)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation............................................................ 396
Amortization of intangible assets....................................... 205
Amortization of barter advertising costs................................ 60
Provision for doubtful accounts......................................... 16
Charge related to issuance of stock options and restricted stock........ 14
Changes in operating assets and liabilities:
Accounts receivable..................................................... (1)
Prepaid expenses and other assets....................................... (287)
Accounts payable and accrued expenses................................... 99
Postpetition liabilities................................................ 66
Deferred revenue........................................................ (44)
Other, net.............................................................. 8
--------
Net cash provided by operating activities before reorganization items...... 220
Changes in operating assets and liabilities from reorganization items:
Professional fees for services rendered and other costs incurred
in connection with Chapter 11 proceedings.......................... 72
--------
Net cash provided by operating activities.................................. 292
--------
Cash flows from investing activities:
Purchases of fixed assets............................................... (36)
Purchases of marketable securities....................................... (999)
Maturities and sales of marketable securities........................... 600
--------
Net cash used in investing activities...................................... (435)
--------
Cash flows from financing activities:
Payments of principal on capital leases and notes payable............... (65)
--------
Net cash used in financing activities...................................... (65)
--------
Net change in cash and cash equivalents for the period..................... (208)
Cash and cash equivalents, beginning of period............................. 7,011
--------
Cash and cash equivalents, end of period...................................$ 6,803
========
The accompanying notes are an integral part of these consolidated financial
statements.
5
DICE INC.
(Debtor-in-Possession)
BALANCE SHEET
as of April 30, 2003
(unaudited)
(In thousands except
per share data)
ASSETS
Current assets
Cash and cash equivalents................................................. $ 4,036
Marketable securities..................................................... 1,100
Prepaid expenses and other current assets................................. 1,810
---------
Total current assets.................................................. 6,946
Fixed assets, net......................................................... 1,038
Restricted cash........................................................... 57
Investments in subsidiaries............................................... 23,511
Other assets.............................................................. 39
---------
Total assets.......................................................... $ 31,591
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Prepetition accrued liabilities not subject to compromise................. $ 404
Amounts payable to subsidiaries, net...................................... 3,065
Accrued reorganization items, net......................................... 269
Prepetition liabilities subject to compromise............................. 73,115
Postpetition liabilities.................................................. 274
Leases payable--current................................................... 545
---------
Total current liabilities............................................. 77,672
Leases payable............................................................... 181
Other liabilities............................................................ 261
Commitments and contingencies
Stockholders' deficit
Common stock, par value $.01; 75,000 shares authorized;
11,104 shares issued.................................................. 111
Additional paid in capital................................................ 126,683
Accumulated other comprehensive income.................................... 1
Treasury stock at cost, 5 shares.......................................... (200)
Accumulated deficit....................................................... (173,118)
---------
Total stockholders' deficit........................................... (46,523)
---------
Total liabilities and stockholders' deficit........................... $ 31,591
=========
The accompanying notes are an integral part of these consolidated financial
statements.
6
DICE INC.
(Debtor-in-Possession)
STATEMENT OF OPERATIONS
for the month ended April 30, 2003
(unaudited)
(In thousands except
per share data)
Revenues....................................................... $ --
--------
Operating expenses:
Sales and marketing......................................... 25
General and administrative.................................. 226
Depreciation................................................ 6
--------
Total operating expenses................................ 257
--------
Loss before reorganization items, net, and interest............ (257)
Provision for reorganization items, net........................ (96)
Interest expense (contractual interest expense was $405
for the month ended April 30, 2003)......................... (9)
Interest and other income...................................... 6
--------
Net loss....................................................... $ (356)
========
Basic and diluted net loss per share........................... $ (0.03)
========
Weighted average shares of common stock
outstanding used in computing basic and diluted
net loss per share.......................................... 11,104
The accompanying notes are an integral part of these consolidated financial
statements.
7
DICE INC.
(Debtor-in-Possession)
STATEMENT OF CASH FLOWS
for the month ended April 30, 2003
(unaudited)
(In thousands)
Cash flows from operating activities:
Net loss................................................................$ (356)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation............................................................ 6
Changes in operating assets and liabilities:
Prepaid expenses and other assets....................................... (334)
Postpetition liabilities................................................ 66
Other, net.............................................................. 51
--------
Net cash used in operating activities before reorganization items.......... (567)
Changes in operating assets and liabilities from reorganization items:
Professional fees for services rendered and other costs incurred
in connection with Chapter 11 proceedings.......................... 72
--------
Net cash used in operating activities...................................... (495)
--------
Cash flows from investing activities:
Purchases of marketable securities...................................... (999)
Maturities and sales of marketable securities........................... 600
--------
Net cash used in investing activities...................................... (399)
--------
Cash flows from financing activities:
Transfers from subsidiaries, net........................................ 62
Payments of principal on capital leases................................. (60)
--------
Net cash provided by financing activities.................................. 2
--------
Net change in cash and cash equivalents for the period..................... (892)
Cash and cash equivalents, beginning of period............................. 4,928
--------
Cash and cash equivalents, end of period...................................$ 4,036
========
Cash receipts and disbursements:
Cash receipts...........................................................$ 7
Cash disbursements...................................................... (500)
--------
Net cash receipts (disbursements)..........................................$ (493)
========
Cash disbursements to determine fee to US Trustee:
Cash disbursements......................................................$ 500
Less: Cash disbursements by Debtor on behalf of non-Debtor
subsidiaries....................................................... (500)
Add: Cash disbursements by non-Debtor subsidiaries on
behalf of Debtor................................................... 194
--------
$ 194
========
The accompanying notes are an integral part of these consolidated financial
statements.
8
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION AND COMPANY BACKGROUND
Basis of Presentation
Dice Inc. ("Dice") (formerly known as EarthWeb Inc.), a Delaware corporation,
provides online technology recruiting and career development services. Dice
provides services to hire, train and retain technology professionals through two
operating subsidiaries, Dice Career Solutions, Inc. ("DCSI"), which operates an
online job board (dice.com) for technology professionals, and MeasureUp, Inc.
("MeasureUp"), a provider of certification test preparation and assessment
products for technology professionals. Dice and its wholly-owned subsidiaries
are referred to as the "Company".
The consolidated financial statements of the Company and the financial
statements of Dice have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation of the consolidated financial statements have
been included.
Liquidity Issues
The Company has sustained net losses and negative cash flows from operations
since its inception. The Company's ability to meet its obligations in the
ordinary course of business is dependent upon its ability to establish
profitable operations, renegotiate the terms of its indebtedness, or raise
additional financing through public or private equity financings, collaborative
or other arrangements with corporate sources, or other sources of financings to
fund operations. On January 27, 2003, the Company did not make an interest
payment of $2.43 million due on its 7% Convertible Subordinated Notes due
January 2005 (the "Notes"). The indenture (the "Indenture") governing the Notes
contains a 30-day grace period. The Company reclassified $69.4 million in Notes
outstanding to current liabilities. The accompanying financial statements have
been prepared assuming the Company will continue as a going concern. The matters
described above raise substantial doubt about the Company's ability to continue
as a going concern. The Company's plan to address these matters through a
capital restructuring plan and related bankruptcy filing is described below. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability of assets or the amounts of liabilities
that may result from the possible inability of the Company to continue as a
going concern.
Capital Restructuring Plan
On January 28, 2003, the Company entered into a lock-up agreement with Elliott
Associates, L.P. and Elliott International, L.P. (together, "Elliott"), which
hold approximately 48% of the Notes. The lock-up agreement calls for Elliott to
vote in favor of a plan in which Dice would exchange 95% of its common stock for
all of the $69.4 million outstanding face amount of the Notes, and for Dice to
effect this transaction through a pre-arranged Chapter 11 bankruptcy filing and
to emerge from the process as a privately held company. That process is
described in Note 2.
NOTE 2--PETITION FOR RELIEF UNDER CHAPTER 11
On February 14, 2003 (the "Petition Date"), Dice filed a voluntary petition (the
"Petition") under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") for the purpose of confirming its pre-arranged Joint Plan of
Reorganization (the "Plan") dated February 14, 2003 with the majority holders of
the Notes. The Petition was filed with the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court") and was assigned Case
No. 03-10877 (BRL). As of the Petition Date, Dice commenced operating its
business and managing its properties as a debtor-in-possession.
Dice's operating subsidiaries did not commence bankruptcy proceedings, and the
Company expects them to continue to operate in the ordinary course of business
without any court-imposed restrictions. Under the Bankruptcy Code, the rights
and treatment of prepetition creditors and shareholders may be substantially
altered. As of April 30, 2003, it is not possible to predict the outcome of the
Chapter 11 case in general or the effect of the case on the Company's business,
or on the interests of creditors and shareholders. Since the commencement of the
bankruptcy proceedings, Dice has been paying its postpetition trade obligations
in the ordinary course of business as prescribed by the Bankruptcy Court.
9
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
On February 14, 2003, in connection with the Joint Plan of Reorganization and
pursuant to the Bankruptcy Code, Dice submitted a Proposed Disclosure Statement
(the "Disclosure Statement") to the Bankruptcy Court. The Disclosure Statement
summarizes the Plan and contains information concerning, among other matters,
Dice's history, business, results of operations, management, properties,
liabilities and the assets available for distribution under the Plan. In
addition, the Disclosure Statement contains the anticipated organizational
structure and operation of the reorganized entity.
Among other things, the Plan is expected to (1) divide the allowed claims of
creditors and the allowed equity interests of equity holders into several
classes; (2) provide how each class will be treated and otherwise be impaired by
the Plan; (3) provide for early extinguishment of approximately $69.4 million in
aggregate face amount of Dice's outstanding Notes in exchange for approximately
95% of the reorganized Dice's outstanding common stock on a pro forma basis; (4)
provide for payment in full in cash of all unsecured trade creditor claims if
the aggregate amount of those claims totals no more than $475,000; (5) provide
that the largest 130 holders of common stock issued and outstanding prior to the
confirmation of the Plan retain a pro rata share of 5% of the reorganized Dice's
outstanding common stock based on their existing equity; and (6) provide for the
treatment of executory contracts and unexpired leases. Classes which are
impaired by the Plan are entitled to vote, unless no compensation or payment is
provided for such class, in which event such class is conclusively deemed not to
have accepted the Plan. In general, a class is impaired if legal, equitable or
contractual rights attaching to the claims or equity interest of the classes are
modified, other than by curing defaults or reinstating maturities.
While Elliott has agreed to support the Plan structure described above, no
assurance can be given that other parties entitled to vote will vote in favor of
the Plan or that the Plan will be fully or timely approved by all the relevant
parties, including the Bankruptcy Court, or not subsequently modified. Moreover,
Dice's Chapter 11 proceeding may have a material adverse affect on the
consolidated financial position and results of operations of the Company. For
example:
o Dice and its subsidiaries may be unable to attract and retain
qualified employees;
o Dice's limited management resources will be strained;
o the Company's current customers may reduce the amount of services they
purchase from the Company;
o prospective customers may be unwilling to enter into agreements to
purchase the Company's services;
o the Company's current vendors may attempt to cancel their contracts
with the Company, which would limit the Company's supply of goods and
services that the Company requires to operate, or they may refuse to
ship to the Company on credit and or require advance payment; and
o prospective vendors may refuse to do business with the Company or may
require prepayments by the Company on terms that are unacceptable.
As of April 30, 2003, the Plan has not been confirmed by the Bankruptcy Court.
Accordingly, all unsecured, prepetition obligations that have not been approved
for payment by the Bankruptcy Court have been segregated in the Company's
consolidated balance sheet as of April 30, 2003 as "Prepetition liabilities
subject to compromise." Such obligations are classified as current liabilities
in the Company's consolidated balance sheet as of April 30, 2003 because
management expects Dice's Chapter 11 proceeding to be concluded in less than one
year.
10
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
As of April 30, 2003, Dice's prepetition liabilities subject to compromise
consisted of the following (in thousands):
7% convertible subordinated notes..........................$ 69,434
Accrued interest........................................... 2,687
Obligation for termination of lease........................ 227
Accounts payable and other................................. 767
--------
Total $ 73,115
========
Under Chapter 11 of the Bankruptcy Code, most claims against Dice in existence
prior to the filing of the Petition, including long-term debt that is in
default, have been automatically stayed while Dice continues business operations
as a debtor-in-possession. Under AICPA Statement of Position ("SOP") 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code,"("SOP 90-7") Dice is required to adjust prepetition liabilities subject to
compromise to the amount of the claim allowed by the Bankruptcy Court, even
though such liabilities may not be paid in full. As of April 30, 2003, since the
Plan has not been confirmed and no claims have been allowed by the Bankruptcy
Court, the Company has reported Dice's prepetition liabilities subject to
compromise at their historical amounts in the accompanying consolidated
financial statements.
The historical carrying value of the debt issuance costs related to the Notes of
$935,000 was written off as of February 14, 2003.
In accordance with SOP 90-7, the consolidated statement of operations presents
the results of operations of the Company while Dice is in Chapter 11
proceedings. Expenses resulting from the restructuring are reported separately
as reorganization items. For the month ended April 30, 2003, Dice recognized
expenses directly associated with the Chapter 11 bankruptcy proceeding in the
amount of $99,000. In addition, for the month ended April 30, 2003, the Company
recognized interest income in the amount of $3,000 on accumulated cash that Dice
did not disburse as a result of its Chapter 11 reorganization proceedings. Such
interest income has been offset against the aforementioned reorganization
expenses.
For the month ended April 30, 2003, provision for reorganization items, net,
consists of the following:
Expense/(Income)
---------------
Legal, advisory, and claim solicitation fees.... $ 115
Other, net, including reclassification of
operating expenses....................... (16)
---------
99
Interest income................................. (3)
---------
Total $ 96
=========
For financial reporting purposes, Dice is required to recognize interest expense
during the Chapter 11 proceedings only to the extent that it will be paid during
the proceedings or it is probable that it will be an allowed claim. Accordingly,
Dice did not recognize interest expense of $405,000 on the Notes. For the month
ended April 30, 2003, Dice's reported interest expense was $9,000.
As of April 30, 2003, Dice's postpetition liabilities consisted of the following
(in thousands):
Employee related costs ....................... $ 126
Other accrued liabilities .................... 148
---------
Total $ 274
=========
11
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
NOTE 3--SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES
Principles of Consolidation
The consolidated financial statements include the accounts of Dice and its
principal subsidiaries, DCSI, EW Knowledge Products, Inc. and Measure Up. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Intercompany Transactions
The Company operates a centralized cash management system, under which DCSI
makes payments on behalf of Dice, which are charged to Dice at cost.
Dice incurs certain costs on behalf of its subsidiaries which are charged to the
subsidiaries at cost.
Revenue Recognition
The Company generates revenue from the following sources:
Paid job listings. Paid job listing revenues are derived from the sale of
technology job listings and access to a searchable database of candidates on the
dice.com website to recruiters and employers. Paid job listing revenues are
recognized ratably over the period in which the customer contracts to display
job listings.
Certification test preparation and assessment. Revenues from MeasureUp are
derived by providing online certification test preparation and related products
for technology professionals and offering instructor-led training classes.
Technology professionals preparing for certification exams use these products at
training centers or individually online, as well as at the Company's training
classes. Revenue from MeasureUp's online certification preparation exams and
other training courses is recognized ratably as courses are provided. Revenue
from the sale of CD-ROM test preparation exams is recognized when the product is
shipped.
Cash and Cash Equivalents
All highly liquid investments with maturities of three months or less when
purchased are considered cash equivalents. Restricted cash is reported
separately on the balance sheet.
Concentration of Credit Risk
Substantially all of Dice's excess cash, cash equivalents and marketable
securities have been invested in a diversified portfolio of debt instruments of
United States government agencies and high quality money market instruments.
The Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral on accounts receivable.
Accounts receivable allowances are provided for estimated uncollectible
accounts, sales discounts and returns.
Marketable Securities
Dice's marketable securities are comprised of U.S. government agency securities
with readily determinable market values. Marketable securities are classified
and accounted for as "available-for-sale" and are reported at fair market value
with the resulting net unrealized gains or losses reported as a separate
component of stockholders' deficit. If management determines that an unrealized
loss is other than temporary, such loss will be charged to the statement of
operations.
Fixed Assets
Depreciation of equipment, furniture and fixtures, computer software and
capitalized website development costs are provided under the straight-line
method over estimated useful lives ranging from two to five years. Amortization
of leasehold improvements is provided over the lesser of the term of the related
lease or the estimated useful life of the improvement. The cost of additions and
betterments is capitalized, and repairs and maintenance costs are charged to
operations in the periods incurred.
Goodwill and Other Intangible Assets
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("FAS") No. 142, "Goodwill and Other
Intangible Assets"
12
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
("FAS 142"), effective for fiscal years beginning after December 15, 2001. Under
the rules, goodwill and intangible assets deemed to have indefinite lives are no
longer amortized, but are subject to annual impairment tests in accordance with
FAS 142. Other intangible assets continue to be amortized over their useful
lives. The Company applied the FAS 142 rules in accounting for goodwill and
other intangible assets in the first quarter of 2002.
Goodwill is not subject to amortization and is tested for impairment annually,
or more frequently if events or changes in circumstances indicate that the asset
may be impaired. The impairment test consists of a comparison of the fair value
of goodwill with its carrying amount. If the carrying amount of goodwill exceeds
its fair value, an impairment loss shall be recognized in an amount equal to
that excess. After an impairment loss is recognized, the adjusted carrying
amount of goodwill is its new accounting basis.
Intangible assets, resulting from acquisitions of websites and other assets, are
being amortized using the straight-line method over three to five years which
approximates the expected period of benefit. The carrying amount of intangibles
is reviewed on a regular basis for the existence of facts or circumstances, both
internal and external, that suggest impairment. Dice determines if the carrying
amount of an asset is impaired based on anticipated undiscounted cash flows
before interest and income taxes. In the event of impairment, a loss is
recognized based on the amount by which the carrying amount exceeds the fair
value of the asset. Fair value is determined primarily using the anticipated
cash flows before interest and income taxes, discounted at a rate commensurate
with the risk involved.
Bad Debt
The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of the Company's customers were to deteriorate, resulting in
an impairment of their ability to make payments, additional allowances may be
required.
Income Taxes
The Company recognizes deferred taxes by the asset and liability method. Under
this method, deferred income taxes are recognized for differences between the
financial statement and tax bases of assets and liabilities at enacted statutory
tax rates in effect for the years in which the differences are expected to
reverse. The effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date. In addition, valuation
allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be realized. The primary sources of temporary differences
are depreciation and amortization of intangible assets and operating loss
carryforwards.
Risks and Uncertainties
The Company has a limited operating history and its prospects are subject to the
risks, expenses and uncertainties frequently encountered by companies in the new
and rapidly evolving markets for Internet products and services. These risks
include the failure to develop and extend the Company's online service brands,
the rejection of the Company's services by consumers, vendors and/or
advertisers, the inability of the Company to maintain and increase the levels of
traffic on its online services, as well as other risks and uncertainties. In the
event that the Company does not successfully execute its business plan, certain
assets may not be recoverable.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. The
Company's significant estimates include the useful lives and valuation of fixed
assets, goodwill and intangible assets; the accounts receivable allowance for
doubtful accounts; and the income tax valuation allowance.
13
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
NOTE 4--7% Convertible Subordinated Notes
In January 2000, Dice completed a private offering pursuant to Rule 144A of
$80.0 million aggregate principal amount of its 7% Convertible Subordinated
Notes, due January 25, 2005. Proceeds to Dice, net of issuance costs, were $77.2
million. Pursuant to a prospectus dated May 9, 2000, as supplemented from time
to time, the holders of the Notes may offer for sale the Notes and the shares
into which the Notes are convertible. The Notes are convertible, at the option
of the holder, at any time on or prior to maturity into shares of Dice common
stock. The conversion price, subject to adjustment, is $39.10 per share, which
is equal to a conversion rate of 25.5754 shares per $1,000 principal amount of
Notes and would result in the issuance of 1,755,802 shares of Dice common stock,
if the $69.4 million principal amount of the Notes currently outstanding was
converted. Interest on the Notes is payable semiannually on January 25 and July
25 of each year. On or after January 25, 2003, the Company is entitled to redeem
the Notes for cash in whole at any time, or from time to time in part, at the
following redemption prices (plus accrued cash interest to the redemption date):
from January 25, 2003 through January 24, 2004 at a price of 102.8% per $1,000
principal amount; thereafter at a price of 101.4% per $1,000.
In April 2002 and August 2001, Dice repurchased $1.76 million and $8.8 million
of its Notes for aggregate purchase prices of $1.24 million and $2.98 million in
cash, respectively, plus accrued interest.
14
DICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------------------------------------------------
CASE NAME: Dice Inc., CASE NO.: 03-10877 (BRL)
For month ended April 30, 2003
TAX QUESTIONNAIRE
Gross salaries paid..................................................... $105,444
Gross salaries incurred................................................. $115,989
Federal and state income taxes withheld and paid........................ $ 28,612
Payroll taxes withheld.................................................. $ 3,004
Payroll tax contributions incurred...................................... $ 3,304
Gross taxable sales..................................................... --
Property taxes.......................................................... --
Other taxes............................................................. --
Employee income taxes withheld and paid:
- ---------------------------------------------------------------------------------------------------------------
Withheld Paid
- ---------------------------------------------------------------------------------------------------------------
Taxing Authority Amount Date Amount Date
- ---------------------------------------------------------------------------------------------------------------
Federal $11,423 4/4/03 $11,423 4/4/03
- ---------------------------------------------------------------------------------------------------------------
Federal $11,423 4/18/03 $11,423 4/18/03
- ---------------------------------------------------------------------------------------------------------------
State of New York $2,498 4/4/03 $2,498 4/4/03
- ---------------------------------------------------------------------------------------------------------------
State of New York $2,498 4/18/03 $2,498 4/18/03
- ---------------------------------------------------------------------------------------------------------------
State of Iowa $385 4/4/03 $385 4/4/03
- ---------------------------------------------------------------------------------------------------------------
State of Iowa $385 4/18/03 $385 4/18/03
- ---------------------------------------------------------------------------------------------------------------
Payroll taxes withheld and/or paid:
- ---------------------------------------------------------------------------------------------------------------
Withheld Paid
- ---------------------------------------------------------------------------------------------------------------
Taxing Authority Amount Date Amount Date
- ---------------------------------------------------------------------------------------------------------------
FICA (Employer portion) $1,502 4/4/03
- ---------------------------------------------------------------------------------------------------------------
FICA (Employer portion) $1,502 4/18/03
- ---------------------------------------------------------------------------------------------------------------
FICA (Employee portion) $1,502 4/4/03 $1,502 4/4/03
- ---------------------------------------------------------------------------------------------------------------
FICA (Employee portion) $1,502 4/18/03 $1,502 4/18/03
- ---------------------------------------------------------------------------------------------------------------
New York SDI $8 4/4/03
- ---------------------------------------------------------------------------------------------------------------
New York SDI $8 4/18/03
- ---------------------------------------------------------------------------------------------------------------
New York SDI (pd qtrly) $149 4/17/03
- ---------------------------------------------------------------------------------------------------------------
INSURANCE QUESTIONNAIRE
All insurance policies are fully paid for the current period, including amounts
for workers compensation and disability insurance.
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